Transcript Document

TUPE – Employment Issues
and Competitive Tendering
By
Andrew Monroe
Employment Advice Manager
Community Accounting Plus
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What is TUPE?
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Legislation designed to protect the employment rights
of employees when a business (or undertaking)
transfers or is taken over.
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AND (as from 1st April 2006) TUPE Regs. 2006
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Legislation designed to protect the employment rights
of employees when a “Service Provision Change”
takes place (for example where a contractor takes on a
contract to provide a service for a client from another
contractor)
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Service Provision Changes
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TUPE 2006 only applies where “there is an
organised grouping of employees……which has
as its principal purpose the carrying out of the
activities concerned on behalf of the client”
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The intention being:
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Where the old service provider (i.e. the
transferor) has in place a team of employees to
carry out the service activities, and that team is
essentially dedicated to carrying out the
activities that are to transfer (though they do not
need to work exclusively on those activities) .
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Situations where TUPE
most likely would apply
TUPE could apply where:
 You receive a grant or contract to run a service
previously provided by another organisation.
 You take on a project or a piece of work previously
run by another group.
 You set up a new group to take on a project or a
piece of work previously run by another group.
 You merge with (or take over) another group.
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Transfers where TUPE
most likely does not apply
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Changes in control of a group, e.g. new trustees or
committee members.
Sales or transfer of shares of a business.
The sales of assets without any of the connected
activity.
Transfer of Undertakings outside the UK ??
Provide or run a new service under a grant or contract
using your existing staff and in a different manner to
any other services.
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Employee TUPE Rights
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Upon “transfer” all employees AUTOMATICALLY become
employees of the new employer.
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Employees transfer on the same terms and conditions as if their
Contracts of Employment have NEVER BEEN BROKEN and retain
full continuity of employment.
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Any dismissal (at any time) of an employee for any reason due to
a TUPE transfer would be deemed automatically unfair (as long as
they have the qualifying length of service to lodge a claim; one
year).
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If any terms and conditions are changed for the worse, employees
can still resign for Constructive Dismissal.
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Dismissals due to Economic, Technical or Organisational (ETO)
reasons may be fair depending on the reasonableness of the
circumstances (but its then redundancy).
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Employer TUPE Obligations
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The transferor and transferee employers MUST consult with
employees or their representatives.
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Consultation must inform employees why, when and whether the
new employer intends to take “measures that will affect
employees”.
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Information must be provided before the transfer to allow
meaningful consultation to take place.
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The employer must give employees the “option” not to transfer if
they do not want to.
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All employment related liabilities transfer as well, e.g. outstanding
Tribunal claims, redundancy etc.
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Transferor must pass over all relevant “employee liability
information” records to the transferee (fine of £500 per employee
up to £75,000)
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Due-Diligence Investigations
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Upon transfer all employment liabilities pass to
the new employer !!!!!!!!!
Investigate, ask questions, submit questionnaire
Ask questions on the basis of the expected
transfer date, i.e. “what will be the salaries on
the transfer date”
Indemnities
Redundancy risk? i.e. CA Plus redundancy risk
currently stands at £45,000
Can we afford to do this?
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Consultation Rights
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If more than 20 employees, you MUST consult
collectively and in a set priority
Firstly with any trade union representatives, then ….
Employee representatives, if none …. you MUST
facilitate their election. If still none ….
Employees themselves
Consultation must be about all “measures that will
affect employees”.
Therefore, consult about everything that might
happen …. restructuring, redundancies, changing
work patterns, job descriptions, new place of work
etc.
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Pensions and TUPE
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The original 1981 TUPE Regs, excluded occupational
pensions as an automatic employment right.
However, as of 6th April 2005, the TUPE (Pension
Protection) Regs. came into force.
Employees pension rights are protected in relation to
occupational pensions if they “transfer”.
New employer does not have to provide an identical
but it does have to provide a pension scheme that
provides similar “value related” pension benefits.
New employer can choose if this is to be defined
benefit scheme, defined contribution scheme or a
stakeholder arrangement.
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Dismissal and Redundancy
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General rules on unfair dismissal still apply i.e.
one years qualifying service required
TUPE protects against:
Neither the new or old employer may fairly
dismiss an employee because of the transfer or
for a reason connected with it UNLESS the reason
is due to an “Economic, Technical or
Organisational” (ETO) reason
If there is no “ETO reason” any dismissal is
automatically unfair
Dismissals unconnected with the transfer
(discipline?), TUPE does not apply
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What is an ETO ?
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Dismissals due to ETO reasons are not automatically
unfair but still have to pass the test of being fair and
reasonable
Dismissals due to redundancy are generally deemed
to be an ETO reason
All the following are possible reasons due to
Economic, Technical or Organisational reasons !!
Can’t afford them - company would go bust!
New staff don’t have the skills/knowledge to do the
job!
After reorganisation we will have too many managers!
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Who Transfers ?
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Neither the transferor or the transferee can pick
and choose employees
ALL the employees in the “organised grouping”
MUST transfer
However, any employees working “temporarily”
in the organised grouping do not have any TUPE
rights
Any employees transferred “permanently” by
the transferor to another dept etc. before the
TUPE transfer do not have any rights
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ETO Changes to Terms
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An ETO reason which is connected with a transfer
is NOW POSSIBLE
The ETO must be a reason that “entails changes to
the workforce” i.e. changes in the numbers
employed or changes involving the functions
performed by employees
This does not include freedom to harmonise T &
C’s
There is no “safe period” after which T & C’s can
be changed
Things like pay negotiations should continue in the
new employer in much the same way as they
operated with the old employer
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